Cathie Wood-led Ark Investment Management believes the mobile gaming company Skillz Inc SKLZ has been a victim of misunderstanding after recent short-seller allegations against the company related to its revenue recognition practices and its NFL partnership.
What Happened: Skillz shares have risen 44.8% since Tuesday's close on fresh investor support and are down 9.15% on a year-to-date basis amid Wolfpack Research's classifying Skillz's top games as “stagnant to declining.”
The New York-based hedge fund Ark said it reviewed the reports and believes the claims were either exaggerated or incorrect.
“The recent allegations against the company range from its revenue recognition practices to its recent NFL partnership. After reviewing the reports, we believe the claims to be either exaggerated or incorrect,” ARK Invest said in a stock commentary newsletter on Friday.
“We believe these short reports stem from a misunderstanding of the company, its position in the gaming ecosystem, and its future ambitions.”
Ark owns over 12 million shares in Skillz divided between ARK Innovation ETF ARKK and ARK Next Generation Internet ETF ARKW, worth about $218.7 million as of Friday's close.
See Also: Cathie Wood's Ark Loads Up Another 1.2 Million Shares In Skillz, Also Adds Coinbase, DraftKings
Why It Matters: Skillz is a mobile games platform that enables competitive eSports-style play that hosts billions of casual esports tournaments annually.
Skillz shares tanked last month after Wolfpack said Skillz’s top three games — which make up for 88% of its revenues — had already peaked by the third quarter of 2020 and its growth story is falling apart in the first quarter of this year.
Wolfpack wrote that, while Skillz was projecting a 12.3% sequential growth and 61.4% year-over-year revenue growth in Q1 2021, third-party app data indicated that the company’s total installations had declined by double digits in the first two months of that period.
In February, Skillz announced a partnership with the National Football League to host a global game development competition.
Price Action: The stock closed 9.33% higher at $18.17 on Friday.
Read Next: Why Cathie Wood Is Bullish On Crypto Play Silvergate Despite Recent Slump
Photo courtesy: Skillz Inc.
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